Broomfield, CO – Ski resort operator Vail Resorts, Inc. today reported results for the third quarter of fiscal 2010 ended April 30, 2010. The results reflected an 8.3% increase in Mountain segment net revenue and a 4.6% improvement in total skier visitation compared to the third quarter a year earlier.nMountain Reported EBITDA improved by 9.6% and Resort Reported EBITDA, which includes the Company’s Mountain and Lodging segments, improved by 9.0% for the third quarter as compared to the same period in the prior year. Net income attributable to Vail Resorts, Inc. increased by 18.1% for the third quarter compared with a year earlier.
“I am very pleased with the strong performance that we delivered in the third quarter across our Mountain Division, driven by strengthening destination visitation and guest spending patterns,” said Rob Katz, Chief Executive Officer of Vail Resorts. “Over the course of the 2009-2010 ski season, we have seen consistently improving performance over the prior year in our key Mountain segment metrics, culminating in particularly strong results during the spring break and Easter holiday periods. In fact, during the spring break and Easter periods in 2010, we saw levels of skier visitation, total lift revenue, ski school revenue, dining revenue and retail/rental revenue that were comparable to the results we saw during the same periods in 2008 and 2007, giving us confidence in improving consumer trends as we start planning for the 2010-2011 ski season.”
Lift ticket revenue increased 7.0%, with similar percentage increases in both lift revenue excluding season passes and season pass revenue. Total skier visitation increased 4.6% in the quarter led by the company’s Heavenly resort in California, which experienced a 9.8% increase in visitation, while overall visitation for the company’s four Colorado resorts — Vail Mountain, Beaver Creek, Breckenridge and Keystone — increased by 3.7%. Season pass holders skied approximately ten days on average during the 2009-10 ski season, with the number of days skied per season pass being lower by a half day on average across all season pass products, despite record low snowfall at the company’s Colorado resorts during the early part of the season.
Overall destination visitation increased by an estimated 7.9% during the third quarter, which favorably impacted the company’s total lift revenue as well as ancillary business revenue, including guest spend per visit. Ski school and retail/rental businesses experienced the largest ancillary revenue increases in the third quarter, up 11.7% and 14.3%, respectively, while dining revenue increased 6.6%, more in line with the overall lift revenue percentage increase.
Lodging Reported EBITDA showed a slight decline compared to the prior year third quarter due to declines at Keystone, largely in group related business.
The company’s Real Estate business is driven by the number and size of projects under construction and ultimately the timing and mix of real estate closings. In the third quarter of both fiscal 2010 and 2009, there were minimal real estate closings.
“Overall, our balance sheet position remains strong, even though we have been funding the construction of two real estate development projects, which are now near completion, with Net Debt leverage of 2.5 times trailing twelve months Total Reported EBITDA; no borrowings under our revolver at the end of the third quarter of fiscal 2010 and virtually no principal maturities due on any of our debt until 2014,” Katz added.
Commenting on the company’s season pass sales for the upcoming 2010-11 ski season, Katz said, “We have just concluded the spring season pass sales period for all of our major season pass categories except for the Heavenly season pass. Through June 6, 2010, which has historically represented roughly a third of our total season pass sales sold over the program period, our total season pass sales to date for the upcoming 2010-2011 ski season have decreased approximately 14% in units and decreased approximately 16% in sales dollars, over the same period last year, due in large part to a decline in Epic Season passes sold during the spring of 2010 over the spring of 2009. Our Epic Season pass sales in the spring of 2010 exceeded our Epic Season pass sales in the spring of 2008 and are consistent with the relative levels of spring sales we see in our other season pass products. We saw unusually high Epic Season pass sales in the spring of 2009, which were largely a timing shift, attributable to the excitement of it being the first renewal period for the season pass and some consumer uncertainty of our future plans for the product.
“Sales in the fall of 2009 actually declined from the fall of 2008,” Katz continued. “Likewise, we currently believe the decline we experienced in the spring of 2010 to be largely due to a timing shift and that we will more than make up the current shortfall in the fall of 2010.”
Commenting on the One Ski Hill Place project at Breckenridge, Katz said, “We recently received the certificate of occupancy on our One Ski Hill Place project and began closing on units under contract. The project was finished on schedule and within our cost budget.
“To date, we have closed on 23 units under contract, and anticipate more scheduled closings to occur over the next several weeks. While we have not had any units formally default to date, we anticipate that a portion of the units under contract may default, primarily due to an inability of certain buyers to obtain appropriate third party financing, given the current state of the financial markets,” Katz acknowledged. “We have full confidence in the ultimate success of this project and will be patient in our approach to ensure we maximize our proceeds from future sales.”